We are often approached by people that have arranged a loan for a debt consolidation but the amount approved is less than what they require to payout all their creditors.
This is a common problem and has the potential to end what would have been a positive refinancing option. Refinancing liabilities such as credit cards or personal loans can save people thousands of dollars in loan repayments.
The good news is in many cases effective debt negotiation can make the difference between a loan refinance being settled or not.
Facilities that attract high interest rates are typically unsecured debts such as credit cards. From a credit providers point of view these types of facilities can be bitter sweet. Sweet given they generate high returns and bitter, if payments are not made the credit provider has no real security to rely on. It is because of this point that credit providers are often willing to lower a payout amount in order to clear a facility.
The question we are often asked is “why would a credit provider agree to lower an amount owed”.
Many people try and refinance their debts as they are struggling with their payments and want to lower their commitments. From a credit providers point of view once a loan falls behind they are often highly motivated to resolve the matter before the situation gets worse.
Another example would be someone that has a change of situation in their life. Let’s say that someone earned $70,000.00 per year. Based on this income they obtained a number of credit cards and personal loans and fully extended all the facilities. They then lost their employment and could only find a new position paying $50,000.00 per year. Based on this income they would not be able to continue to service their current debts. They then tried to obtain a loan to consolidate the debts but given the lower income they were not able to secure enough to retire all the debts fully. In this example even though the current debts are not in arrears (YET) the credit providers would see that it was only a matter of time until they will have problems and would most likely consider reducing the debts if it means they could get out of the impending problem.
The key to effective debt negotiation is to present the situation to a credit provider in such a way that it makes sense for them to take a lesser figure than potentially lose more money later. This is a skill that Clean Credit Debt Resolutions has developed over the years and is something we are very good at.
If a consumer’s situation is documented in this way and presented in a positive manner to a credit provider, they will often see the benefit of resolving a matter and agree to reduce their payout figure to allow a refinance to take place. How much a debt can be reduced by really depends on the condition of the account, the age of the debt and the attitude of the credit provider, however we regularly achieve discounts of between 30 to 60% for our clients, this often means savings of thousands of dollars.
If you find yourself in the position of wanting to refinance your debts, but cannot secure all the funds you need, debt negotiation through a refinance application could be your answer.